Warren Resources to enter Marcellus with assets purchase

Warren Resources Inc., New York, has agreed to acquire the Marcellus assets of Citrus Energy Corp., Castle Rock, Colo., along with two additional working interest owners for $352.5 million, effective July 1.

The Wyoming County, Pa., assets, as of June, are producing 82 MMcfd net of natural gas. Estimated net proved reserves, as of the July 1, total 208.3 bcf, 55% of which are proved developed, according to estimates from Netherland, Sewell & Associates Inc., Warren’s independent petroleum engineering firm.

Warren says its pro forma net production will increase by more than 200% to 118 MMcfd of gas equivalent from 36 MMcfed, while its pro forma net proved reserves will increase by more than 100% to 410.8 bcfe from 202.5 bcfe.

Warren will operate the assets with 100% interest. Complete midstream infrastructure is in place, the company says.

Upon closing of the transaction, management personnel from Citrus will join Warren, including Lance Peterson, president and cofounder of Citrus, who will join Warren’s board; Zachary Waite, who will become vice-president, business development and Marcellus operations; and Daniel Collins, who will become vice-president, Marcellus land.

Warren enters the Marcellus with existing activities primarily focused on oil in Wilmington field in the Los Angeles basin and the Leroy Pine project in the Santa Maria oil basin, both in California, and gas in Wyoming’s Washakie basin (OGJ Online, May 12, 2010; June 8, 2011).

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